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Coronavirus: France earmarks €8bn stimulus package to support its car industry

Jill Petzinger
Germany Correspondent, Yahoo Finance UK
French president Emmanuel Macron visits a factory of manufacturer Valeo in Etaples, near Le Touquet, northern France on 26 May. (Ludovic Marin/AFP via Getty Images)

French president Emmanuel Macron announced a €8bn (£7.1bn, $8.8bn) financial aid package on Tuesday (26 May) to support its automotive industry, which has been hard hit by the pandemic.

Speaking at a press conference at car-parts maker Valeo, Macron said that “we need to not only save the industry, but to transform it.”

Boosting production and sales of electric and hybrid cars is central to the government’s stimulus plan — including significant buyer incentives — and the overall goal is to produce over 1 million clean-energy vehicles in the country by 2025.

As part of the support plan, Renault (RNO.PA) will get a state-backed loan of €5bn.

Earlier on Tuesday morning Macron tweeted: “The health crisis dealt the French automotive industry a massive and brutal blow. It is part of our economy, these are thousands of jobs. Our support will be massively increased.”

The French automotive industry employs 400,000 people nationally.

So far, Paris has spent €450bn on a raft of fiscal aid measures to help the economy withstand the coronavirus pandemic, according to finance minister Bruno Le Maire. The government this month approved a €7bn bailout for Air France (AF.PA).

New car sales, already weakening in March, pretty much ground to a halt in April in the EU, as coronavirus lockdowns kept people in their homes and car plants and dealerships shut.

READ MORE: Coronavirus: New car sales in the EU crashed by 76% in April

Passenger car registrations plunged by over 76% from April 2019, with all 27 EU markets suffering a double-digit sales drop. France’s monthly new car registrations fell by nearly 89%, and Germany saw a 60% decline.

Bloomberg reported this week that Italian-US car giant Fiat Chrysler (FCA.MI) is set to receive a £5.6bn bailout from Intesa Sanpaolo, the country’s biggest retail bank.

READ MORE: Fiat Chrysler primed to receive Europe's biggest carmaker bailout

In the UK, Tata-owned Jaguar Land Rover is reportedly in talks with the government over a requested £1bn in emergency aid, after the pandemic devastated sales.

In Germany, where the automotive industry is one of the pillars of the economy, car industry heads are due to meet with the government again in June to discuss a plan for how to boost demand, especially for greener vehicles.